Used Car Buying Scams – Offsite Dealer Scam

Well, my kid is growing up and needs some more room in the vehicle department, so I decided it was time to look for a new car. Of course, I’m working on several projects, so the timing isn’t right for a new car off the lot and as most people know, you lose about 10% – 20% of the value of a car as soon as you drive it off the lot. So I decided to go the used car route to get a cheap, reliable car for a while until we decide to go not so cheap, reliable car later down the road. Have you ever thought about buying a used car? Holey Moley! What a headache it can be!

Now when you buy used, there are typically 4 major routes to go that includes people you know, auctions, dealers, and online car sites. As I don’t know anyone selling a car right now, I looked at dealers and online sites. Dealers tend to mark things up $2,000 – $3,000, so while they’re good to get a feel of a car and test drive some, know that you’re paying for that.

And as much as Car Max says they have a “No Haggle” price that’s good for everyone, I learned from a dealer friend of mine that it’s no haggle on the upper end – meaning you’re still like a regular dealer that pays low for a car and marks things up for a profit. So while you “might” find a decent deal at Car Max, don’t be “Scammed” by their “No Haggle” price. Everything, by the way, is negotiable.

And speaking of scams, beware the dealer that doesn’t show cars on their lot. Huh? Yeah. Let’s talk about this dealer scam.

First, know that it primarily occurs with small car dealers and typically ethnic dealerships. Primarily Latino, Hispanic dealerships (that I’m aware of). I’m not sure where they got this from and apparently, a lot of them do this. Do what?

Well, they’ll post vehicles for sale for cheap on Craigslist and other car sites (more on Craigslist later). For example, I was looking at a 2010 Honda Odyssey. These normally go for about $12,000 – $15,000 depending upon the model, mileage, and several other factors. I saw a listing that had it for about $8,000! Wow! That’s fantastic! It’s way underpriced! The pictures looked great too! So of course I reached out to the owner (it’s listed “by owner” on Craigslist by the way, not “by Dealer” like it should have been).

Since I don’t speak Spanish, here’s the exact conversation.

Me: “Hi! Can you tell me more about your car on Craigslist? Looks great! ”

Guy selling car: “No hablo Anglaise”

Me: “No Hablo Espanol.”

I’m thinking, “Dang. Now what?”

Me: “Your Car. On Craigslist. I want to see it.”

Guy selling car: “Oh, si, si.”

Me: “How do I see it? Where are you?”

Guy selling car: “Si. On Craigslist.”

Me: “No. Where are you?”

Guy selling car: “Yes.”

Me: “Address?!?”

Guy selling car: “Yes. Yes.”

Me: “I need an address. Can you give me an address?”

Guy selling car: “Si.”

Then SILENCE. I mean, I was waiting for an address.

Me: “Um, what’s the address?”

Guy selling car: “Text. Text.”

Me: “Oh, you’re going to text it to me?”

Guy selling car: “Si, si.”

Me: “What time? You available tomorrow?”

Guy selling car: “Si.”

Me: “What time?”

Guy selling car: “Yes.”

As you can see, I wasn’t getting very far, very fast.

Me: “10:00 o’clock. You available at 10:00 o’clock?”

Guy selling car: “Si.”

Me: “Oh, what’s your name?”

Guy selling car: Nothing… SILENCE.

Me: “Oh, what’s your name? Your Name.”

Guy selling car: “Martin”

Me: “O.k. Martin. Send me the address. I’ll see you tomorrow. Bye.”

Click. Whew! That was painful.

I guess it would have been a lot easier had I spoken Spanish and well, can’t win them all.

Fast forward to the next day. I did get an address from him, so I headed out bright and early to meet him. Mind you I’m in Chicago. So it was about 30 miles away and an hour and a half to get there. So I leave about 8:30 am.

So I get to the address he gives me around 10:00 am and there’s nothing. So I pull over on the side of the street. I call him up and I say, “I’m here. Where are you?”

Martin: “You there?”

Me: “Yes. I don’t see you. Where are you?”

Martin: “Coming. Park at grocery store.”

Me: “What grocery store?”

There’s no grocery store even close to where I was by the way.

Martin: “Grocery store.”

Me: “There’s NO grocery store. I’m near a gas station, a restaurant. I’m at the corner of Reagan and Clinton streets” (of course I changed the actual intersection for this article).

Martin: “Grocery store at 4000 S. Reagan”

Me: “I’m at 40 S. Reagan. The address you sent me.”

Martin: “4000 S. Reagan”

Me: “Really?!? That’s about 10 minutes away. O.k. Heading there now.”

Martin: “Si”

So I turn around and start driving again. After another 10 minutes, I arrive at the “new” address and sure enough, I see Pete’s Groceries. I pull in the parking lot and look around. I see a mini-van and pull up to it. Of course, it’s not Martin or the mini-van I’m there to see. No sign of Martin around. So I call him again.

Me: “I’m here. Where are you.”

Martin: “Almost there.”

By the way, I’m already about 15 minutes late (it’s about 10:15 am). So why the heck isn’t Martin already there?

Me: “What? Where are you?”

Martin: “5 minutes.”

Me: “O.k. I’m waiting.”

Fifteen minutes later, Martin pulls in. I’m not happy and I’ve been driving for almost 2 hours, so what am I going to do? Might as well look at the car.

So I look at the car and there’s a light busted out in the front, scratches I didn’t see in the picture and a few minor scratches and dings.

Me: “Why did you not give me the address to the dealership? Why aren’t we meeting there?”

Martin: SILENCE – with a look of confusion on his face.

Now I’m just getting some really bad vibes from the whole situation. First it’s a dealer car posted in “by owner”. Second, Martin’s not the owner. He said his brother was and after a bit more prodding, his brother “did” except it was a car from the dealership, not his brother’s actual car. Third, Martin is way overselling this thing. Fourth, there were some things wrong that were not listed on the ad or the pictures (i.e. the car was more damaged than the pictures showed it to be). And fifth, why the heck were we meeting at a grocery store and not a dealership?

So you know what? Time to walk. I thank Martin and tell him I’m going to see a few more cars and will let him know if I want to buy his car later. Then I take off.

Later, I talk to a buddy of mine who owns a dealership and he wasn’t surprised at all. He told me the scoop which was that a lot of small dealerships do this because they’re want to unload the car quickly because something is wrong.

And when I asked him to clarify what he meant by wrong, he said, “well, it could be a few things.” He went on to tell me that typically, the dealer is looking to flip the car “off the books”. Meaning they bought the car from someone and they’re looking to sell it “off the lot” and make a quick buck without recording the title. This of course is illegal.

What they’ll do is they’ll just give you the signed title without every going on title themselves. So there’s no record of them every buying or owning the car. They can then pocket the difference without ever having to record anything or pay taxes. In addition, there’s no liability if something goes wrong with the car because there’s no record they sold it to you. It’s a win-win for them.

Sure, you might get a decent price on a car and you don’t know what’s wrong with it. In addition, you’ve got no recourse for going after them if something is wrong. You might be able to go after the original seller as they’re on title and poor original seller who just wanted to sell their car. Then again, you might be implicated in some kind of scam, so if you report it, you might be in more hot water than you expected.

My buddy went on to tell me that he once had two guys attempt to do this to him, and he met them at a house. He did a quick online title search and neither of the two guys was on title. He asked them their names and then he showed them the title and asked them, “Who’s this guy on title?” After a surprised look, they said it was a friend’s car. The address on title wasn’t even the address of the house either. So he asked them whose house they were at. They said they were at a friend’s house. So these guys were selling a car that wasn’t theirs at a house they didn’t own. Can you say, “HOT?!?”

And this happened to me a second time. Again with a Hispanic guy who worked for a car dealership. This time we met at a K-Mart parking lot after the address he gave me was at a restaurant who had no idea what we were talking about. “Is this 9382 Sherman Rd?” “Yes.” “Are you selling a car here?” “No.” “Do you know anything about a used car for sale?” “No idea.” O.k. After I called the owner he said to meet at the K-Mart. Bad sign!

Anyway, I walked from that deal too.

So watch out for guys selling cars from dealerships off the lot. It’s almost always going to be a scam!

Hey, if this was eye-opening to you, look for part 2 where I reveal another scam when buying a used car.